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KSB Bank to Sign USD 5 Million Loan Agreement

Published: May 14, 2012 | 8:39 am
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Vice President Banking of BSTDB: “Black Sea Region has been performing better than many other regions”

The COMMERCIAL TIMES

The Black Sea Trade and Development Bank (BSTDB) made available a revolving trade finance facility in the amount of up to USD 5 million to KSB Bank. The official loan agreement was signed on May 8, 2012 in Radisson Blu Iveria hotel by the representatives of KSB Bank and BSTDB. KSB Bank will advance short-term sub-loans to Georgian exporting and importing companies.

The operation implements the BSTDB strategy to support Georgian export potential and the country’s small and medium enterprises’ (SME) development. BSTDB’s facility will be used for financing exports from Georgia and imports from the countries of the black sea region. It will help to increase competitiveness of the Georgian export sector, mainly SMEs and it will promote regional trade.

The Black Sea Trade and Development bank is an international financial institution established by Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey and Ukraine. The BSTDB headquarters are in Thessaloniki, Greece. BSTDB supports economic development and regional cooperation by offering loans, credit lines, equity and guarantees for projects and trade financing in the public and private sectors in its member countries.

The COMMERCIAL TIMES interviewed Mustafa Boran, Vice President Banking of BSTDB regarding the above mentioned loan agreement and other activities planned for future.

- What is the period of time that KSB Bank has, to return the loan?

- This is a credit line for an indefinite time. As it represents a revolving trade finance facility, unless one of the sides decides to terminate this agreement it may continue forever in practice. To terminate the agreement one of the sides has to send a cancellation notice, a one-month cancellation notice to be precise, in order to enable the other side to prepare and then they can terminate the agreement. But any amount which is drawn will be paid on the due dates.

- At what interest rate will the loan be given?

- Unfortunately, the interest rate is something confidential, only to be known by KSB Bank and BSTDB, but I can assure you that it is in market rates, relatively competitive price I might add.

- For how long had BSTDB and KSB Bank been negotiating about this loan?

- Since last year, I assume. We began negotiations in early January, as we had to manage different operations and exchange information with KSB Bank in order to organize the agreement. Such deals require complicated and intricate procedures, so reasonable time is essential in such matters.

- Has BSTDB negotiated with other Georgian banks?

- Of course, we have previously negotiated with other Georgian banks. For example, we have another signing with Basis Bank today. In the past, we had several financial intermediaries. We are always open to different offers and if there are any demands from other banks, we will, certainly consider the request.

 

-The Black Sea Trade and Development Bank (BSTDB) was established by the founding 11 member countries of the Black Sea Economic Cooperation (BSEC) – as a regional multilateral development bank and financial pillar of BSEC. Which countries would you say are best performing economically in the Black Sea Region?

- If you look at the region, during the past couple of years it has made tremendous advances. Considering the competitive international economy, Black Sea Region has been performing better than many other regions; consequently, it is ahead of them. Last year for example, the average growth rate was 4%, which was not the case in other regions. So region as a whole is growing and moving forward, but out of the 11 member countries we could point out that Caucasus countries have around 4-5 % average growth rate, for Georgia’s case it was 5%, for Turkey it was 8%, although for two European countries it was relatively lower – 2% considering the financial crisis In Greece. We cannot point out a single country, which does better than the other ones, instead I could say that the region in general is performing well.

- How much money was invested in Georgia last year and in which projects?

- Last year we got engaged in four operations. We have financed two equity funds, one municipality project, we have provided a guarantee and in addition a semi-financed trade facility to financial intermediary. So, in total it was more than EUR 25 Million.

- As an independent international financial institution, the Bank raises additional resources in international capital markets to finance its activities. Which capital markets are better to apply for additional financing, considering the financial crisis in Euro Zone?

- We like to diversify ourselves and have as many sources as possible, so we do not consider the euro-zone as the only source of funding. We also look at other markets as USA. We try to take advantage of any source as long as they are offering acceptable prices, so our priorities are to have resources at sensible price and at reasonable conditions.

- A statement of capital subscriptions illustrating the number of shares and the amount subscribed by each member, including their respective callable, payable and the amount paid, shows that Georgia has the smallest indicators among the member countries. Does it mean that BSTDB could be less interested in Georgian market?

- Of course not, we have other countries like Georgia that have small shares. Georgia has 0.5%, Armenia and Moldova have only 1% each, others have somewhere around 2%, so a 0.5 difference is not that important as it does not mean that one country is more devoted and committed to the bank than others. It is their presence that counts as they are shareholders. Therefore, every member country is equally important and interesting to BSTDB.

 

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